The constitution and a national IR regime

A more recent High Court decision on the power, Re Dingjan; Ex parte Wagner (1995) 183 CLR 323, also falls short of the broad view. The lowest common position of Chief Justice Mason and Justices Deane, Gaudron and McHugh was that “the power conferred by s 51(20) extends, at the very least, to the business functions and activities of constitutional corporations and to their business relationships”.

This issue was again raised in the High Court in Victoria v Commonwealth (Industrial Relations Act Case) (1996) 187 CLR 416, a challenge to changes brought about to the Industrial Relations Act 1988 (Cth) by the Industrial Relations Reform Act 1993 (Cth) and the Industrial Relations Amendment Act (No 2) 1994 (Cth). Although three states instituted proceedings to challenge the validity of the new legislation, only Western Australia challenged those provisions that primarily relied on s 51(xx); and at the hearing that challenge was abandoned. As was stated in that case at 188: “Subject to one possible exception [as to ‘secondary boycotts’], it was conceded in argument by Western Australia ... that the parliament has power to legislate as to the industrial rights and obligations of constitutional corporations ... and their employees”. Accordingly, the validity of such legislation was “not an issue”.

Uncertainly about the scope of the corporations power means that it cannot be said with confidence that a law that sought to regulate the full range of industrial matters that can arise between employers and employees would be a valid enactment under the power.

This uncertainty is magnified by the fact any determination would be made by a High Court composed entirely of judges who did not sit on the decision in Re Dingjan; Ex parte Wagner (Justice McHugh retires on November 1, 2005). Moreover, most of the current members of the court have not even delivered judgments that enable an assessment of their likely approach to the power. Resolution of the scope of the power remains very much open.

There are significant limitations upon the scope of the commonwealths corporations power, as well as continuing uncertainty as to its ambit. In these circumstances, it would be brave assessment to state with any confidence that a national industrial relations scheme passed under this power would be held valid by a majority of the High Court.

My view is that the power, including in combination with other powers (such as its powers over territories and interstate trade and commerce), is not sufficient to enact a comprehensive national industrial relations scheme. At the very least, such a power will not be able to extend to industrial matters arising out of some businesses, such as partnerships, that trade within the confines of one state.

Of course, if the federal law were carefully drafted to fall within the narrowest accepted scope of the power, it would likely be valid. However, if the law were drafted in this way it would not extend to many of the matters that would be expected to fall within a comprehensive national law on the subject.

A salutary example is the attempt by the commonwealth to enact a single national corporations law (the Corporations Act 1989 (Cth)) under its corporations power. At the time, it was widely believed that the law would be held valid by the High Court, and the commonwealth passed the Act without support from the states in the form of a co-operative scheme or a referral of power.

In 1990, the issue was resolved in a way that reasserted limits on commonwealth power. In New South Wales v Commonwealth (Incorporation Case) (1990) 169 CLR 482, the High Court held by 6 to 1 that the corporations power does not enable the commonwealth to regulate the incorporation of companies. The decision meant that the commonwealth could not, by itself, establish a national corporations regime, but could only do so in co-operation with the states. Today, such co-operation provides the foundation for Australia’s national corporations law. It provides a better model for moving forward in this area.